EUR/GBP traded slightly higher last week, after it hit support at 0.8415. However, the recovery remained limited near the 0.8455 zone. Overall, the pair remains below the downside resistance line taken from the high of December 8th, and thus, even if it recovers a bit more, we will consider the short-term outlook to be negative.
If the bears are willing to take charge from near the 0.8455 territory, we could see them targeting the 0.8415 line again, or the 0.8407 barrier, marked by the low of November 25th. Should they overcome that hurdle as well, we could see them pushing towards the 0.8380/85 zone, marked by the lows of November 22nd and 24th. Another break, below that key support area could carry larger bearish implications, perhaps paving the way towards the low of February 23rd, 2020, at 0.8330.
Shifting attention to our short-term oscillators, we see that the RSI, although slightly above 30, it turned down again, while the MACD is negative, but still stays slightly above its trigger line. Both indicators detect negative speed, which is inline with the idea of further declines, but the fact that the MACD stays above its trigger line suggests that it may be better to wait for a dip below 0.8407 as such a move will confirm a forthcoming lower low on the 4-hour chart.
We will abandon the bearish case and start examining a bullish reversal, upon a break above 0.8528. This could also confirm the break above the downside line taken from the high of December 8th. The next stop may be at 08553, marked by the high of December 14th, where another break could extend the advance towards the 0.8572 zone, near the peak of November 11th. If the bulls are not willing to stop there either, then we may experience extensions towards the peak of December 8th, at 0.8600.
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